Sales of distressed properties made up 10.2 percent of total home sales in October CoreLogic said on Tuesday.  The October number represented a slight seasonal increase of 0.2 percent from September but was two full percentage points lower than in October 2014.

Sales of lender owned real estate (REO) constituted 6.9 percent of sales compared to an 8.5 percent share a year earlier and was the lowest for any October since 2007.  Short sales made up 3.3 percent of sales for the month.  Short sales have maintained a share within the 3 to 4 percent range since mid-2014.

Distressed sales hit a peak share of 32.4 percent in January 2009 with REO alone having a 27.9 percent share.  The declining market share of REOs and short sales has contributed to the increase in home prices as distressed properties are generally sold at a discount. 

The distressed sales share was lower than it was in October 2014 in all but nine states.  Maryland had the largest share of distressed sales of any state at 20.3 percent in October 2015, followed by Michigan (19.6 percent), Florida (19.3 percent), Connecticut (19.1 percent) and Illinois (17.9 percent).

Among large Core Based Statistical Areas (CBSAs) Orlando had the largest share of distressed sales at 21.8 percent, followed by Tampa-St. Petersburg-Clearwater at 21.1 percent, Baltimore (20.7 percent), Miami (20.6 percent), and Chicago 20.5 percent).

CoreLogic points out there will always be some level of distress in the housing market and by comparison the pre-crisis share of distressed sales was traditionally about 2 percent.  At present only North Dakota and the District of Columbia are within one percentage point of their normal level of distressed sales.   If the current year-over-year decrease in the distressed sales share continues there will be a national return to that "normal" 2-percent mark in mid-2019.